Copps counts on Congress to curb fellow commissioners

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SAN FRANCISCO (CBS.MW) - Michael Copps has been on the losing side of many recent Federal Communications Commission decisions on media ownership -- but at least he's found vindication.

One of two Democratic commissioners, Copps was in the minority when the Republican-led commission voted to roll back long-standing media ownership rules in June, and again when it gave a green light to News Corp.'s
NWS,
+1.55%
acquisition of a controlling stake in No. 1 satellite broadcaster DirecTV.

"It's really telling that Congress has had to come in now, on a number of occasions since June 2, and act on what the Commission did," Copps said this week. "It really is a rebuke to the position that the majority assumed in loosening the ownership restrictions."

In a wide-ranging interview with CBS MarketWatch, Copps discussed indecency on the airwaves, his objections to News Corp.'s DirecTV grab, the effects of consolidation on children's television, the future of independently-owned, network-affiliated TV stations, among other matters.

Waking broadcasters up

The FCC voted Tuesday to impose fines totaling up to $755,000 against Clear Channel Communications
CCU,
+1.35%
for 26 violations of indecency statutes by several of its radio stations three years ago. At issue was a show, "Bubba the Love Sponge," that featured characters that depicted a number of explicit sexual acts.

Copps was the only dissenter in the 4-1 vote, saying the fines weren't enough. Also fined was Young Broadcasting's
YBTVA
San Francisco television station, KRON, for airing a morning show in which a puppeteer exposed himself. See full story.

Copps wants to see violators like the Clear Channel stations brought before the commission for a hearing that could lead to possible revocation of their broadcast licenses.

"That would do more than anything else I can think of to wake this industry up and get it to practice some self-discipline and self-policing like it used to do," he said.

Asked how many violations, or what kind, should lead to license revocation, Copps refrained from offering specifics. "When something is as violative as some of these cases we've seen recently, like at WKRK-FM in Detroit, ...this isn't very questionable ground."

The FCC imposed its $27,500 maximum fine against Infinity Corp.-owned WKRK for a broadcast in which several participants in a call-in show discussed sexual practices and techniques.

"If we can't send something like that to a hearing for possible revocation of license," Copps asked, "is it any wonder why people say, 'We don't know quite what your standards are?'"

For its part, Clear Channel said in a statement it wants to see a more consistent indecency standard. "I'd like to see that, too," Copps said.

The June 2 vote

Copps argued vehemently against the June 2 ruling that a company could own TV stations whose combined audience was up to 45 percent of the nation's TV households, up from a previous limit of 35 percent. The U.S. Senate passed an omnibus appropriations bill last week that included a clause setting the cap at 39 percent.

The FCC also voted to loosen restrictions on how many stations could be owned within the biggest markets, boosting the limit from two to three, and dropped a 20-year-old ban on cross-ownership, permitting a company to own newspapers, TV channels and radio outlets in the same market.

Copps isn't thrilled with the Senate's actions, which he says came after both houses of Congress agreed to keep the old 35-percent cap. But there are reasons to believe Congress will keep things the way they were before June 2, he says. "And of course the matter is also in the courts...so this issue has not gone away."

In September, a three-judge panel of the 3rd U.S. District Court of Appeals in Philadelphia issued a stay blocking the FCC's rules from going into effect until a higher court can decide their legality.

'Too much power' for Murdoch

Meanwhile, Rupert Murdoch tightened his grip on the world's satellite market with his $6.8 billion buy of a controlling interest in DirecTV, which received FCC and Justice Department approval last month days before it closed.

News Corp.'s satellite holdings include a 40 percent interest in British Sky Broadcasting
BSY,
and systems in Australia, Japan and Latin America. It also owns the Twentieth Century Fox movie and television enterprises, the Fox Broadcasting Network, numerous regional sports networks and dozens of newspapers.

Copps and fellow Democrat Jonathan Adelstein cast the losing votes in the 3-2 decision to approve the DirecTV deal.

"I just think it's too much power," Copps said. "It's really a marriage of distribution and production. And for years, the whole idea was to have protections against excessive vertical integration and protections against horizontal.

"I wasn't too thrilled, either, when the first thing I read shortly after that was that Fox made that deal with Universal ... to set up a porn channel," Copps said. "You have to take a look at what this [DirecTV merger] means for the future of broadcasting and indecency."

In early January, the Los Angeles Times reported that DirecTV, Universal Music Group and Vivid Entertainment Group, a maker of porn videos, would team up to create a music channel that would show uncensored music videos.

A primary concern in the cable and satellite industries now is a series of disputes with programmers such as sports powerhouse ESPN.

Cox Communications
COX,
-7.28%
is battling with ESPN over the fee that the network charges Cox to transmit its signal. Cox claims ESPN is asking for 20 percent more than in its previous contract, and that such a steep increase will have to be passed on to Cox cable customers. ESPN says Cox exaggerated the amount of the hike, and its network's popularity generates enough local ad revenue for Cox to offset any increase in the carriage fee.

Similar disputes grew heated in recent years, and as contracts expire, there will be others.

The goal of regulators is to make sure consumers aren't trampled by the negotiations, Copps said, as they have been when the right to carry a cable network's programming is tied to a local network affiliate owned by the same programmer.

The solution in this and other matters is not necessarily what's most advantageous for the businesses involved, he said.

"This is a very special industry, with a very special history. This country made the decision many years ago that broadcasting would not be a publicly-run enterprise, it would be a part of the great capitalist system, and people could make a buck in it -- by getting licenses to use the public spectrum.

"But ... the resource is publicly-owned. No company owns an airwave in the United States of America. They only own the right to use those airwaves. And in return for that, they have a solemn obligation to serve the public interest. And that's localism, that's competition, that's diversity, that's all of these things," he said.

The impact of DVRs

A recent SG Cowen report suggests independently-owned, network-affiliated TV stations could be suffer later this decade from the widespread acceptance of digital video recorders, because they allow users to easily skip past commercials. Local advertising revenues will decline, the report said, as it becomes more obvious than fewer people are watching commercials. See full story.

In any discussion of possible revenue losses to DVRs, Copps said, it should be noted that consumers are responding to excess on the part of broadcasters. "Most people feel they see too much advertising."

In the early days of television, "people never envisioned anything like what we have now, from the standpoint of advertising clutter," Copps said. It doesn't particularly surprise me that if people have the technology, they're going to fast-forward through that. Broadcasters are going to have to think long and hard about that, and what they're going to do to make their fare as compelling as possible."

Copps welcomed this month's launch of TV One, the new channel co-owned by Comcast Communications
CMCSK,
the nation's largest cable operator, and Radio One
ROIAK,
an African-American owned radio station owner, but adds that he'll be more pleased when he sees media outlets owned by smaller minority firms.

"We've got a situation in this country where under 2 percent of the television properties are owned by minorities, and in radio, it's only like 4 percent," Copps said. "I don't believe you can have diversity of viewpoint without diversity of ownership and participation in top management."

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